Sales hike helps Puma to pick up profit pace

Puma AG, the sporting-goods maker controlled by PPR SA, said fourth-quarter profit rose 17 percent after new products fueled sales growth in Europe and Asia.

Net income climbed to 38.3 million euros, or 2.39 euros a share, from 32.8 million euros, or 2.03 euros, a year earlier, the German company said in a statement yesterday. That beat the 37.3 million-euro median estimate of six analysts surveyed by Bloomberg and prompted the shares' steepest gain in a month.

Puma collaborated on a shoe range with Italian motorcycle maker Ducati Motor Holding SpA to fuel revenue last year and introduced accessories created with Dutch designer Marcel Wanders.

Sales on a so-called currency neutral basis climbed 14 percent in the Asia-Pacific region and 20 percent in Europe, the Middle East and Africa, while dropping 3.3 percent in the Americas after Foot Locker Inc. reduced orders.

"Puma had an excellent and successful start to the extraordinary sports year 2008," Chief Executive Officer Jochen Zeitz said in the statement, referring to a period that includes the Euro 2008 soccer championship and the Beijing Olympics.

Puma rose 11 euros, or 4.8 percent, to 242.79 euros at 10:53 am in Frankfurt trading, the steepest advance since Jan 24. That clipped this year's drop in the shares to 11 percent.

Order growth

Future orders rose 9.8 percent from a year earlier to 1.19 billion euros after adjusting for currency swings, the Herzogenaurach, Germany-based company said yesterday.

Puma expects sales to grow at a "single digit" pace in 2008. Operating profit will probably rise this year, even though the margin may narrow because of higher marketing costs and expenses to expand Puma's own retail activities, the company said.

"We see the risk that merely a moderate earnings performance and a declining margin in 2008 - in conjunction with overly bullish consensus estimates - will subdue the stock's valuation further," Uwe Weinreich, an analyst at UniCredit SpA in Munich wrote in a note ahead of the earnings. He rates Puma a "hold".

Gross margin, or gross profit as a percentage of sales, widened to 52.3 percent from 50.6 percent, according to Puma, Europe's second-largest sporting-goods maker behind Adidas AG. Margins for footwear rose to 52.3 percent, apparel margins climbed to 52.2 percent, and for accessories the figure was 52.8 percent.

PPR, the Paris-based owner of the Gucci brand, controls about 62 percent of Puma's shares after buying a holding last year and bidding for the rest of the stock.

The French company acquired the majority stake to gain a brand that straddles the line between sporting goods and fashion.

Shoes, clothing

Puma's fourth-quarter sales rose 4.8 percent to 504.4 million euros, PPR said Jan. 24, though US revenue is ebbing after Foot Locker shut stores after two years of profit declines.

That led Puma to cut its forecast for full-year growth in sales and earnings to "low single digits" in May from at least 10 percent.

Fourth-quarter sales of shoes, which generate almost three- fifths of total revenue, gained 7 percent adjusted for currency changes, the company said yesterday.

Sales of clothing such as replicas of the soccer jerseys Puma supplies to World Cup champion Italy increased 15 percent on the same basis.

Puma shares have surged about 18-fold since the end of 2000 as profit jumped 15 times, helped by nostalgia for the 1970s that spurred sales of clothes and shoes evoking the period.

The sporting-goods maker, known for its leaping-cat logo, and larger rival Adidas were founded by brothers Rudi and Adi Dassler and are based in the same southern German town.

Puma was the biggest uniform sponsor in soccer's Africa Cup of Nations tournament earlier this year, outfitting teams including Egypt, which beat Cameroon to defend its title.

Agencies

(China Daily 02/27/2008 page17)